Category Archives: False Advertising

To compete in today’s online world, most companies need to have an online presence. Beyond just having a company web page, many companies choose to engage with their customers and potential customers via social media, as well. And while the Internet has created new avenues for these companies to generate business, they have also created new ways for competitors to deceive and mislead consumers. While false advertising by competitors has always been around, the Internet has allowed businesses to cheaply reach large audiences with their misleading advertisements. These false and misleading advertisements can damage a company’s brand and cause them to lose serious revenue.

One of the quickest and easiest ways for a competitor to damage a brand online is for it to scam review sites. Websites like Yelp allow customers to rate their experience for everyone on the Internet to see. In certain industries, like the restaurant industry, these reviews have a massive impact on a consumer’s decision to patronize the business. While honest reviews are good for consumers, false reviews can hurt consumers and the businesses that play by the rules. Companies have found they can scam these sites by posting fake, positive reviews about themselves or by posting fake, negative reviews about their competitors. Some companies take it upon themselves to do the hard work and to actually post the fake reviews themselves like in Yelp, Inc. v. McMillan Law Group, Inc. In that case, Yelp accused McMillan of using his employees to set up fake Yelp accounts to post fake, positive reviews of his own law-firm in an effort to overshadow one negative review he had received. However, if the company is too busy to do it itself, there are entire businesses set up that do nothing but post fake reviews on review sites (see Edmunds v. Humankind Designs, Ltd.). All a company needs to do is pay some money and watch the positive reviews roll in. While review sites seem to be aggressive in stopping these fake, positive reviews, they are much more protective of the negative reviews. In Yelp, Inc. v. Hadeed Carpet Cleaning, Hadeed believed that many of the negative comments on Yelp about its business were fake and from a competing business. Hadeed attempted to get the identities of the reviewers from Yelp and Yelp refused to disclose them. Hadeed had to fight all the way to the Virginia Supreme Court just to get the names of the anonymous reviewers revealed.

While scamming online reviews requires little effort, some companies have taken deception to a whole new level. In Avepoint, Inc. v. Power Tools, Inc. d/b/a Axceler, Avepoint accused Axceler of creating a fake LinkedIn profile that purported to be an employee Avepoint. The LinkedIn profile stated that the fake employee was based in China and used this to mislead consumers into believing that Avepoint was a Chinese company that produced its software in China. An Axceler sales executive even went so far as to tweet about meeting this fake employee – “Just ran into Jim Chung from Avepoint, Good guy.” Keep in mind, Jim Chung doesn’t actually exist. Avepoint claims that these actions, along with other deceptive and misleading claims, caused consumers to leave them for Axceler.

With all of the opportunities for a competitor to scam the system, how can a company protect itself? Fortunately, there are numerous causes of action that can protect a company from false, deceptive, and defamatory comments and advertisements online. For example, in the Avepoint case, the Court refused to dismiss Avepoint’s trademark infringement, defamation, and deceptive and unfair trade practices claims against Axceler. However, to stop these illegal actions, a company needs to be aware that they are happening. Companies should regularly monitor their online presence by keeping tabs on the reviews being posted about it, Googling the company name, and searching Twitter and Facebook for the company name. That way, the company sees its brand the way consumers see its brand and, if there is false or deceptive content online, the company will become aware of it and can take action.

Social media and review sites are the norm for customers and businesses. Customers rely on these sites when deciding where to spend their money. Sadly, due to this opportunity to make money, less than ethical companies have found ways to scam the system. To stay competitive, ethical companies need to monitor their online brand and be prepared to take action to protect it from fake, online content.